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Overview of an administrative criminal investigation

For starters, administrative investigations are categorized as general investigations, primary investigations or subject to criminal investigations based upon the alleged indiscretion and the manner in which it comes to light. Upon initiation a Special Agent in Charge (SAC) or his or her designee will be assigned and select for investigation all information, after evaluation and screening, are deemed deserving of further inquiry. A brief summary of the basis for opening the investigation is prepared and retained in the administrative file.

After an administrative investigation is completed, the SAC must prepare a special agent’s report (SAR). The SAR includes a detailed account of the investigation and the special agent’s recommendations, and is reviewed by both the special agent’s supervisors and the Chief Counsel, Criminal Tax Division. Upon review the Chief Counsel prepares a Criminal Enforcement Memorandum that discusses the nature of the crime(s) for which the agent recommends prosecution, the evidence relied upon to prove the crime(s), technical or legal issues, anticipated difficulties in prosecution, and the special agent’s specific recommendation. If prosecution is deemed appropriate the SAC refers the matter to the Tax Division or, in some cases, the United States Attorney.

During an administrative investigation of a criminal tax case, the IRS may refer the case directly and simultaneously to both the United States Attorney and the Tax Division for an expedited guilty plea but only if legal source income is involved and the taxpayer’s counsel states that the taxpayer wishes to enter the plea.